Equity markets globally were down across the board yesterday...

Posted: Tuesday, May 14, 2019 - 09:53 EDT

Equity markets globally were down across the board yesterday as a result of the new tariffs enacted by China as a retaliatory measure against the U.S.  The Chinese implemented a list totaling $60bil of U.S. imported goods leading to a 2.41% decline in the S&P500 and a drop of 0.64% in the TSX.  The Chinese stock index continued to trade lower overnight down by 0.64%.  This morning, North American equity futures are shrugging off a potential round of new tariffs and are pointing towards a higher open.  Reports this morning indicate that U.S. trade representatives are readying a list of additional Chinese products worth $300bil that could have tariffs increased to 25%.  This new round of tariffs is not expected to take effect until the end of June at the earliest.  The U.S. is warning the Chinese delegation that it is willing to tolerate some degree of retaliation from China, however the extent cannot be substantial.  President Trump continues to believe that the correct deal is still possible with China and plans to meet with President Xi next month at the G20 summit.

Volumes in the Canadian corporate credit market remained thin yesterday as most investors stayed on the sidelines.  Corporate credit was affected by the negative sentiment as well.  Canadian CDX levels ended the day approximately 5bps wider, although Canadian spreads did outperform spreads in the U.S.  Investors did look to added higher quality names including utilities given the wider levels over the past week.  However, the broader tone remained on client selling.  To end the day, Canadian spreads were weaker by 3-4bps with the corporate credit continuing to widen by 1-2bps to start this morning.

Equity Markets:

  Index Level % Change QTD YTD Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
S&P 500 2,811.87 -2.41% -0.58% 12.98% 6.64% -0.76%

3.43%

7.71% -13.52% 13.65%
TSX

16,193.41

-0.64%

0.84%

14.24%

4.44% -4.52%

6.77%

-0.56% -10.11% 13.29%

Rates:

 

Today

% Change

QTD change

YTD change

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Canada 5 Year

1.56%

-0.05% 0.04% -0.33% 1.87% 1.97% 2.07% 2.34% 1.89% 1.52%
Canada 10 Year 1.68% -0.06%

0.06%

-0.29% 2.05% 2.09% 2.17% 2.43% 1.97% 1.62%
Canada 30 Year 1.92% -0.04% 0.02% -0.27% 2.27% 2.23% 2.21% 2.42% 2.18% 1.89%
30yr Generic Corporate A rated Spread 1.50% 0.00% 0.00% 0.00% 1.21% 1.24% 1.28% 1.30% 1.50% 1.50%
30yr All-in Corporate A rated Yield

3.42%

-0.04% 0.02% 0.02% 3.48% 3.47% 3.45% 3.72% 3.68% 3.39%
US 10 Year 2.41% 0.01% 0.01% -0.27% 2.41% 2.74% 2.86% 3.06% 2.69% 2.41%
CDX IG 64.222 -1.381                

The information contained herein is intended for advisors for general information only and is compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made as to its accuracy. All opinions contained in the commentary and expressed by the portfolio manager are subject to change without notice and are provided in good faith without legal responsibility. All market data is sourced from Bloomberg.